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TMI Blog2025 (1) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, "Bulk Transactions"), and also with individual and corporate clients (hereafter, for the sake of brevity, "Retail Transactions"). 3. With respect to Bulk Transactions, in respect of the tax periods 2008 09, 2009 10 and 2010 11, the services rendered by the Appellant was claimed to be exempt on the basis of Notification No. 19/2009 ST dated 07.07.2009 as amended by Notification No. 27/2011 ST dated 31.03.2011. This claim of the Appellant was apparently not accepted by the Respondent Revenue. The Respondent felt that the Appellant would be entitled to exemption only after the Amendment of the Notification of 2009 by the Notification of 2011, and that contrary to the contention of the Appellant Notification of 2011 was only prospective. It would be applicable from the date on which it came into force, i.e., 01.04.2011. The Respondent thus confirmed a demand of Rs. 7,30,28,090/-- in this respect. 4. With respect to Retail Transactions, the dispute revolves around the quantum of the consideration charged on such services. There are two methods by which the consideration relating to the aforesaid services are brought to tax, which are as follows: a. First, the Assessee or regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pent balances of foreign currencies available in such cheques and cards from travellers, surrenders such cheques and cards to other license--holders and banks, and thereafter retrieves the value of foreign exchange available therein. Here, the difference between sale and purchase exchange rates represents the profit or the loss of the Appellant. The resulting profit or loss is described as "profit or loss on settlement." The Commissioner has found in this respect that this profit forms a part of the taxable value and hence, confirms the demand of service tax of Rs.4,60,610/-- thereon. 7. The Appellant also sells foreign exchange to holders of Exchange Earners' Foreign Currency (EEFC) accounts on which it makes a profit. The Commissioner finds that these transactions involve the activity of the sale of foreign currency which, in terms of section 65(12) of the Finance Act, 1994 read with Rule 60(zm) of the Service Tax Rules, 1994 would be a taxable service. A demand of service tax of Rs.13,88,410/-- is thus confirmed in this respect. 8. In this above background, the issues that arise for our consideration are as follows: a. Whether the Notification of 2011 would operate retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of the service tax leviable thereon under section 66 of the said Finance Act. [Notification No. 19/2009-S.T., dated 7-7-2009]" "Foreign currency - Service tax exemption to sale and purchase for inter-bank transactions - Notification No. 19/2009-S.T. amended w.e.f. 1-4-2011 In exercise of the powers conferred by of sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 19/2009-Service Tax, dated the 7th July, 2009, published in the Gazette of India, Extraordinary, vide number G.S.R. 491 (E), dated the 7th July, 2009, for the words "a Scheduled bank, by any other Scheduled bank", the words "any bank, including a bank located outside India, or money changer, by any other bank or money changer" shall be substituted. 2. This notification shall come into force on the 1st day of April, 2011. [Notification No. 27/2011-S.T., dated 31-3-2011]" 11. It will be seen from the Notification of 2009 that the Interbank transactions of the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination, be construed as being the Government recognizing a mistake committed on its part. Until 2011, the internship was to cover only such services to the extent they were provided by and to scheduled Banks. After the amendment the intention was to confirm the exemption on a wider class of persons. This is what emerges from literal linguistic reading of the amending Notification of 2011. There is no ambiguity or lack of clarity in that Notification which requires us to take recourse to any other principles of interpretation. In our opinion, no two views are possible on this point. Further, the law is well settled that except in matters of procedure, there is a presumption that law operates prospectively unless there is compelling evidence to the contrary, being, inter alia, any express statement to that effect. We find no such intent. The intent of the Notification of 2011 is a change in the legislative policy on to whom such exemption must be granted. This change in policy cannot be lightly held to be retrospective, particularly where there are no express words in the Notification that make it retrospective. 15. Insofar as the case law relied upon by the Appellant is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT--BANG to contend that a demand based on the ground that the consideration charged by the assessee was not up to the expectation of the Revenue was illegal. Reliance was also placed on State Bank of Bikaner & Jaipur Vs CCE Jaipur -- 2011 (24) STR 425 (Tri.--Del.) to contend that no service tax would be chargeable on the profit earned on foreign exchange. Reliance was placed on Citi Bank N.A Vs CST Chennai -- 2013 (43) STR 445 (Tri.--Chennai) to argue that the mark--up on foreign currency transactions in the case of a credit card is a part of the exchange rate to be applied and hence would be a part of the cost. Reliance is placed on Commissioner of Income Tax Vs Mahinda Mills/Arun Textile 'C'/Humphreys/Glassgow Consultants [2000] 109 Taxman 225 (SC) to contend that the assessee cannot be forced to claim a benefit it does not wish to claim; and on Tiara Advertising Vs Union of India -- 2019 (30) GSTL 474 (Telengana) to contend that the assessee cannot be forced to exercise an option. 19. Per Contra, the contention of Sri Sanjay Kakkar is that in terms of the proviso to Rule 6(7B) of Service Tax Rules, 1994, the option would only be available to the assessee where the consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue. The Revenue itself submits that it does not have exact figures to quantify the so--called hidden consideration. Besides all this, in our opinion, the assessee is correct in submission that the option provided under Rule 6(7B) is an option available to it and not to the Revenue. Even if the Revenue was entirely correct, arguendo, in its findings of fact, the proper course of action for the Revenue would have been to determine the quantum of the hidden consideration and charge the same to tax in accordance with the provisions of section 66 and 67. These findings do not permit the Revenue to assign to itself the right to exercise the option under the aforesaid Rule. For these reasons, we agree with the contentions of the Assessee in this respect and allow the relevant grounds of Appeal. 22. We shall now deal with issue (c): it is because of the applicant that the transaction was between the appellant and other licensed entities; Notification No. 19/2009 granted exemption in respect of taxable service referred to in S. 65(105)(zm) or Section 65 (105) (zzk), when provided to a scheduled bank by another scheduled bank in relation to enter bank transactions of purchase and s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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